'The Kashmir Files' tax-free in 3 states: What does that mean?

Simply put, when a state government says that a movie will be tax-free in the state, it essentially means it will reimburse state Goods and Service Tax on entry to the exhibition of the film in cinema halls.

At least three states in India have announced that Vivek Ranjan Agnihotri's film based on the exodus of Kashmiri Hindus, 'The Kashmir Files' will be run tax-free in their theatres.

On Saturday, Haryana had taken the decision to make the film tax free. A day later, Gujarat and Madhya Pradesh have followed suit.

The film, starring Pallavi Joshi, Anupam Kher, Darshan Kumar and Mithun Chakraborty and produced by Zee Studios, tracks the systematic targetting of people from the Kashmiri Pandit community by Pakistan-backed terrorists. The film made an impressive opening at the box office, minting an estimated Rs 3.55 crore.

Director Vivek Ranjan Agnihotri, his wife and actress Pallavi Joshi and producer Abhishek Agarwal had recently met Prime Minister Narendra Modi who said he appreciated the film.

So what does making a movie tax free really mean?

Simply put, when a state government says that a movie will be tax-free in the state, it essentially means it will reimburse state Goods and Service Tax on entry to the exhibition of the film in cinema halls.

This is subject to conditions like:

a) The cinema hall or multiplex neither increases the entry fee nor changes the seating capacity inside the hall.

b) The cinema theatre or multiplex shall during the period of reimbursement allowed not charge state GST from customers and the tickets shall be sold at a price minus GST.

c) The tickets sold for the tax-free movie shall prominently have the words 'GST not collected by the order of the state government' printed on them.

d) The registered taxpayers of the multiplex or cinema theatre shall file returns and deposit tax on the entry fee charged from the customers on entry to the exhibition of the tax-free film from its own reserves in the same manner as being deposited for other films.